Im guessing it can’t detect them as objects at all, not that it can’t classify them as humans.

Conant and Ashby’s good regulator theorem in cybernetics says, “Every good regulator of a system must be a model of that system.”

The AI needs an accurate model of a human to predict how humans move. Predicting the path of a human is different than predicting the path of other objects. Humans can stand totally motionless, pivot, run across the street at a red light, suddenly stop, fall over from a heart attack, be curled up or splayed out drunk, slip backwards on some ice, etc. And it would be computationally costly, inaccurate, and pointless to model non-humans in these ways.

I also think trolley problem considerations come into play, but more like normativity in general. The consequences of driving quickly amongst humans is higher than amongst human height trees. I don’t mind if a car drives at a normal speed on a tree lined street, but it should slow down on a street lined with playing children who could jump out at anytime.

Cameras and image recognition are cheaper than LIDAR/RADAR, so Tesla uses it exclusively.

They need to safely ignore shadows, oil stains on the road, just because there's contrast on an image doesn't mean it's an object.